Why Facebook is reining in commercial content as its IPO looms

Facebook rolled out its first mobile ads today, a crucial step for the social network’s business as users increasingly connect with Facebook through their phones and tablets. In the run-up to the company’s IPO, this was an area investors were giving particular scrutiny.

The challenge of mobile advertising, especially with phones, is the smaller screen size offers little real estate to place the typical display ads Facebook runs along the right rail of its website.

But Facebook is hoping to shift advertisers’ focus to in-stream content, the sort of viral, earned media that looks less like an ad and more like something your friends might share. It’s akin to the way promoted tweets are integrated alongside normal messages on Twitter.

“This is our first ever Facebook marketing conference, and we like to think that dinosaurs and whales put everyone in that thinking big mood,” said Facebook COO Sheryl Sandberg at the company’s announcement event and conference at the Museum of Natural History in New York this morning. “It’s a chance to talk about where we came from and where we are going.”

Sandberg ran down a list of notable Facebook moments. A woman had a son with rash and posted a photo. A distant friend told her to get to hospital; this was a rare disease that if not treated quickly could be fatal. Her son’s life was saved. The Egypt protests swelled online to a movement offline that toppled a 30 year-old regime. A couple in Chicago trying to adopt put up a Facebook page about themselves. A stranger saw the comments from friends and family and fell in love with their community. Eventually she gave them her child for adoption.

“We believe there is a movement from the wisdom of crowds to the wisdom of friends. Less shouting, more engaging. If you want to talk to me, you have to listen to me as well.”

Marketers, says Sandberg, need to talk and listen in a real conversation, just like a typical Facebook user would to their friends.